This constant instability makes it necessary to seek new business opportunities. First, you need to define a framework to help search for opportunities. Once you have a good understanding of company goals and areas of expertise, the next step is to analyse the market, assessing consumer needs and how they are being met by companies today. In order to identify market opportunities, the business model as a whole must be evaluated by identifying consumers and companies and other factors such as brand value propositions, direct and indirect competitors, supply chains, existing regulations and the general environment.
To understand your demand, you must identify consumer segments that share common characteristics. Hard variables can help estimate the number of potential customers a business can have. Soft variables can help identify motivations that lead to purchasing decisions including price, prestige, convenience, durability and design. An example of how segmentation can help identify market opportunities is Aguas Danone, a bottled water company in Argentina.
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Aguas Danone identified two drivers behind non-alcoholic drinks consumption: health and flavor. Bottled water was perceived as healthy but did not offer the attribute of good taste. Soft drinks and juices tasted good, but were perceived as highly caloric. The company realised there was an opportunity for healthy drinks offering both taste and flavour. As a result, they launched flavored bottled waters Ser with great success.
Purchase situations must also be examined to uncover expansion opportunities. Questions to ask when reviewing purchase analysis are:. Looking at distribution channels, payment methods and all other circumstances that involve purchasing decisions can teach you how consumers buy and how you can position your product appropriately. Offering new shopping alternatives may bring new customers. For example, vending machines offering snacks like yoghurt and individual juices have been introduced in the hallways of the subway of Santiago de Chile, promoting on-the-go consumption.
Another aspect to explore is the acceptance of different means of payment.
For example, Amazon recently launched Amazon Cash in the US, enabling consumers without credit cards to shop online by adding credit to their personal Amazon accounts. In addition to analysing demand and purchasing situations, it is important to analyse supply. Knowing the existing players in the market where you are competing or going to compete is important when evaluating opportunities.
Relevant questions in this case are:. For example, SKY airline, competing in the Chilean market against a notably positioned brand such as LAN, found there was an opportunity to differentiate itself with a low cost model, which until then had not existed in Chile. SKY lowered its costs, by eliminating complimentary food and beverages for all passengers during flights and in doing so lowered its ticket prices.
Opportunities can also be found by analysing substitute industries. For example, thanks to the decrease in airfares, airlines may look for opportunities in consumer segments currently supplied by other means of transport. Air carriers should research how many people travel on long-distance buses and trains, which routes are the most in-demand, how much travelers pay for their tickets, what the occupation rate of long-distance buses and trains is and what is necessary to persuade a current passenger of buses or trains to choose to travel by plane instead.
This type of analysis helps establish competitive advantages against indirect competitors and provide insight on additional opportunities for growth. For instance, a packaging company should monitor sales of products that it could potentially package, while a company producing coffee machines should gather insights on the evolution of different types of coffee sales. Trends in complementary markets should be taken into account when making investment decisions.
In some cases, the objective of companies is not to continue operating within an industrial sector but to expand a certain business model or philosophy. For example, a British holding of companies, Easy Group, started maximising the occupancy rate of flights with the airline Easy Jet.
Easy Group understood that it was preferable to sell a seat at a lower price than not selling it at all. Easy Jet opted for a rate management model that depended on the occupancy rate of flights and the time remaining until the day of the flight. With this business model, it managed to increase occupancy rates.
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Easy applied the same model to cinemas when it created Easy Cinema and then with buses for Easy Bus. In any case, to enter a new industry it is important to learn about competition first: market sizes, market shares, growth rates, unit prices, per capita sales and brands positioning. When a company operates in a mature or saturated market, exploring other countries may lead to additional opportunities.
Markets in different countries grow at different paces for several reasons, including disparities in the level of economic development and local habits. Having information on the size of the market and competitors in other countries will help to estimate the business potential.
In addition to product sales, you can also investigate what happens in more developed countries in terms of consumption habits. For example:. Answers to those questions in more developed countries can serve as indicators of the potential the indexes have in their own country. On the other hand, monitoring what happens in other countries may lead to new products or services present still absent in your current market.
In a world of increasingly global competition, nations have become more, not less, important.
As the basis of competition has shifted more and more to the creation and assimilation of knowledge, the role of the nation has grown. Competitive advantage is created and sustained through a highly localized process. Differences in national values, culture, economic structures, institutions, and histories all contribute to competitive success.
There are striking differences in the patterns of competitiveness in every country; no nation can or will be competitive in every or even most industries. Ultimately, nations succeed in particular industries because their home environment is the most forward-looking, dynamic, and challenging. These conclusions, the product of a four-year study of the patterns of competitive success in ten leading trading nations, contradict the conventional wisdom that guides the thinking of many companies and national governments—and that is pervasive today in the United States.
In companies, the words of the day are merger, alliance, strategic partnerships, collaboration, and supranational globalization. Managers are pressing for more government support for particular industries.
Among governments, there is a growing tendency to experiment with various policies intended to promote national competitiveness—from efforts to manage exchange rates to new measures to manage trade to policies to relax antitrust—which usually end up only under mining it.
To investigate why nations gain competitive advantage in particular industries and the implications for company strategy and national economies, I conducted a four-year study of ten important trading nations: Denmark, Germany, Italy, Japan, Korea, Singapore, Sweden, Switzerland, the United Kingdom, and the United States. I was assisted by a team of more than 30 researchers, most of whom were natives of and based in the nation they studied.
The researchers all used the same methodology. The other nations represent a variety of population sizes, government policies toward industry, social philosophies, geographical sizes, and locations.
Most previous analyses of national competitiveness have focused on single nation or bilateral comparisons. By studying nations with widely varying characteristics and circumstances, this study sought to separate the fundamental forces underlying national competitive advantage from the idiosyncratic ones. In each nation, the study consisted of two parts. Many measures of competitive advantage, such as reported profitability, can be misleading. A nation was considered the home base for a company if it was either a locally owned, indigenous enterprise or managed autonomously although owned by a foreign company or investors.
We then created a profile of all the industries in which each nation was internationally successful at three points in time: , , and The pattern of competitive industries in each economy was far from random: the task was to explain it and how it had changed over time. In the second part of the study, we examined the history of competition in particular industries to understand how competitive advantage was created.
On the basis of national profiles, we selected over industries or industry groups for detailed study; we examined many more in less detail. We went back as far as necessary to understand how and why the industry began in the nation, how it grew, when and why companies from the nation developed international competitive advantage, and the process by which competitive advantage had been either sustained or lost.
We chose a sample of industries for each nation that represented the most important groups of competitive industries in the economy. We studied some of the most famous and important international success stories—German high-performance autos and chemicals, Japanese semi-conductors and VCRs, Swiss banking and pharmaceuticals, Italian footwear and textiles, U.
We also added a few industries because they appeared to be paradoxes: Japanese home demand for Western-character typewriters is nearly nonexistent, for example, but Japan holds a strong export and foreign investment position in the industry. We avoided industries that were highly dependent on natural resources: such industries do not form the backbone of advanced economies, and the capacity to compete in them is more explicable using classical theory.
We did, however, include a number of more technologically intensive, natural-resource-related industries such as newsprint and agricultural chemicals. The sample of nations and industries offers a rich empirical foundation for developing and testing the new theory of how countries gain competitive advantage. A fuller treatment in my book, The Competitive Advantage of Nations, develops the theory and its implications in greater depth and provides many additional examples. It also contains detailed descriptions of the nations we studied and the future prospects for their economies.
National competitiveness has become one of the central preoccupations of government and industry in every nation. Yet for all the discussion, debate, and writing on the topic, there is still no persuasive theory to explain national competitiveness. While the notion of a competitive company is clear, the notion of a competitive nation is not. Some see national competitiveness as a macroeconomic phenomenon, driven by variables such as exchange rates, interest rates, and government deficits.
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